The S-1 filing paints a fuller picture of the cloud software vendor's future and culture

The enterprise software market on Thursday suddenly got an intimate look inside Workday, a red-hot startup that makes cloud applications for human resources and financials, with the public release of its S-1 IPO filing.

Workday, which was co-founded by former PeopleSoft CEO Dave Duffield, has definitely held its strategic cards closer than most Silicon Valley startups looking to make inroads against the likes of Oracle and SAP, and it reportedly filed its IPO (initial public offering) confidentially with the U.S. Securities and Exchange Commission a couple of months ago, taking advantage of a recently passed law.

"Workday has been very secretive and done a great job controlling the news flow and message to the market," said Jarret Pazahanick, an SAP HCM (human capital management) software consultant and close observer of the industry, via email Friday. "The S-1 was the first chance for many outsiders to get a deeper perspective on their overall business. It is becoming obvious that acquisitions of Taleo and SuccessFactors by SAP and Oracle were largely defensive moves aimed at slowing down the threat of Workday."

Here's a look at five key revelations contained in Workday's S-1, both in terms of its history and future, that potential customers and investors should ponder.

There won't be another PeopleSoft situation: Duffield and co-founder Aneel Bhusri intend to retain a majority stake in Workday even after raising a hoped-for US$400 million in the IPO, the date for which hasn't been revealed.

On one hand, this is not altogether surprising, given the hostile takeover that led to Oracle's 2004 acquisition of PeopleSoft, and Duffield's well-documented angst about the deal's aftermath, which led to thousands of layoffs.

Still, the confirmation of Duffield and Bhusri's intentions should be welcomed by IT buyers wary of Workday's long-term future.

Of course, nothing prevents the co-founders from deciding to sell their stakes at some point. Then again, maybe they believe Workday has the potential to reach Salesforce.com-like revenues, and intend to stick around for the entire ride.

Employees' pay is tied to customer satisfaction: Duffield's PeopleSoft was known for its folksy, customer-friendly culture and in at least one concrete respect, the same is true for Workday. Its S-1 reveals that "customer satisfaction is an element of our executive and employee compensation models," although further specifics weren't revealed.

At the same time, Workday doesn't lock down its top employees into contracts, so if any of them get tired of pleasing customers, they are free to go elsewhere. "We do not have employment agreements with our executive officers or other key personnel that require them to continue to work for us for any specified period and, therefore, they could terminate their employment with us at any time," the S-1 states.

Customers can't cancel early: About that customer-friendliness -- like anything, it only goes so far. Another passage in Workday's S-1 reveals that its "subscription contracts are non-cancelable, and typically have a term of three to five years."

While cloud vendors have long pointed to the added flexibility subscription pricing gives customers, including increased freedom to switch software companies. But "non-cancelable" contracts, as much as they protect Workday's revenue streams, seem more like the "lock-in" SaaS (software as a service) vendors tend to decry.

Workday's intimate ties to its most prominent reference customer: Big-name reference customers are key for any new company seeking credibility with the market, especially the large enterprises Workday is courting.

Workday managed to get one of these early on in the form of $30 billion electronics manufacturer Flextronics, which signed a 200,000-seat deal for Workday's HR software. That move could have helped Workday land other high-profile deals, such as with Kimberly-Clark.

Flextronics CIO David Smoley has frequently spoken to the press about Workday and appeared at industry events along with Workday executives.

Now Workday's S-1 sheds some additional light on its relationship with Flextronics. The companies signed the HR software pact in 2008 and since then, Flextronics has made a series of payments to Workday totaling about $5.7 million. That's a "great deal" in Pazahanick's view.

While the companies' relationship may include some mutual back-scratching, it also underscores the fact that a corporation the size of Flextronics is willing to stake its own reputation on Workday.

Workday's financial battle against Oracle and SAP has a long way to go: Workday started out with HR software but has made it clear that it wants to displace or beat out the likes of Oracle and SAP for core financials.

The S-1 makes it clear that Workday has more work to do in this pursuit. Just 10 percent of Workday's customers have adopted its financial management software, according to the filing.

But Workday is planning to stay the course. "In the near-term, we expect that our research and development investments will continue to be highly focused on our financial management application," the filing states.